High Hopes for Offshore Wind
March 2012

Explorer's Renewable Energy Technologies Technology Map highlights the growth of offshore wind-energy development in Europe. Wind-energy players in the United States, China, and elsewhere hope to develop their large offshore wind resources also. High costs still present significant market challenges, and intense competition among wind-turbine manufacturers is also becoming evident in the offshore sector.

The overall wind industry continued to enjoy rapid growth in 2011, with record installations of 41.2 gigawatts (GW) of wind-power capacity bringing total world capacity to 238 GW (see Figure 1), according to the Global Wind Energy Council. China alone added 18 GW of new capacity in 2011, bringing that nation's total wind-energy capacity to 62.7 GW. China, along with Europe (96.6 GW), the United States (46.9 GW), and India (16.1 GW) continue to dominate global wind-power markets, with more than 93% of the world's installed capacity. Countries including Canada, Brazil, Mexico, Australia, and New Zealand—and several emerging markets in Latin America, Africa, and Asia—are also seeing significant growth.

Offshore wind technology is less mature and more expensive than onshore wind technology but offers some key advantages: Offshore winds are often stronger and more consistent than winds onshore, and producers can often build offshore-wind farms close to major population centers near coastlines. Deepwater installations far from shore also create fewer aesthetic and noise issues for the public, which may reduce public resistance to new wind farms and allow a relaxation of constraints on turbine design. Nearly all operational offshore-wind farms are currently in Europe, led by the United Kingdom and Denmark, which pioneered offshore wind development some 20 years ago.

Offshore-Wind Growth in Europe

Europe remains the world's largest wind-energy market but faces a lack of good onshore sites. The region continues to maintain an aggressive focus on offshore wind to underpin future industry growth. In 2011, the European Union offshore wind sector added 866 megawatts (MW) of new capacity (9% of the region's total wind-power installations) to reach cumulative offshore-wind capacity of 3.8 GW, according to the European Wind Energy Association (EWEA). A total of 45 offshore-wind farms with 1371 offshore wind turbines are now in operation. An additional nine offshore projects totaling 2.4 GW are currently under construction, and preparatory work has begun on another nine projects with combined capacity of 2.9 GW. The United Kingdom is the largest offshore wind market, with 2094 MW, followed by Denmark (857 MW), the Netherlands (247 MW), Germany (200 MW), Belgium (195 MW), Sweden (164 MW), Finland (26 MW), and Ireland (25 MW). In addition, developers installed three experimental floating turbines in Norway, Sweden, and Portugal.

The ten North Sea countries are moving forward with ambitious plans to install 40 GW of offshore wind in the North Sea region by 2020 (and more than 100 GW by 2030), along with building a massive offshore supergrid. Ministers from Belgium, Denmark, France, Germany, Ireland, Luxembourg, the Netherlands, Norway, Sweden, and the United Kingdom, plus the European Commission, signed a memorandum of understanding in late 2010 to initiate the project and are also working to eliminate institutional barriers to electricity trade between EU countries. Researchers for the OffshoreGrid project are currently designing the overall grid and preparing recommendations on configuration and integration issues. The OffshoreGrid project will extend down the coasts of the North Sea countries and connect with improved onshore networks and interconnecting high-voltage direct-current (HVDC) cables between countries. The system will also enable Norway's hydropower resource to help smooth out variable wind resources to meet power needs with minimal use of fossil-fuel-based peaking plants.

The need for new bulk electricity-transmission capacity continues to be a major bottleneck that could slow major wind projects in all regions—onshore and offshore. HVDC technology, which significantly reduces transmission losses, is emerging as a strong component of the development of offshore-wind power in Europe. Swiss engineering giant ABB recently announced a $1 billion contract to supply an HVDC power link connecting an offshore wind farm in the North Sea to Germany's mainland grid. Germany's Siemens has also announced several contracts based on its HVDC systems to support renewable energy installations.

Offshore Turbine Trends

According to EWEA, German firm Siemens AG is the dominant offshore turbine supplier, with an 80% share in 2011, followed by Germany's REpower Systems (13%) and the BARD Group (7%). Siemens also has the largest share (53%) of all installed offshore turbine capacity in Europe; Denmark's Vestas Wind Systems has a 36% share. REpower, WinWind, BARD, GE, and a few other suppliers make up the remaining 11% share. Offshore wind development has been a major driver toward increasing turbine sizes, and offshore wind farms continue to grow larger and deeper. The average offshore wind-farm size is now nearly 200 MW at a water depth of about 23 meters; offshore farms under construction are almost 300 MW on average, and projects in planning are even larger. The average offshore turbine size increased to 3.6 MW in 2011, up from 3 MW in 2010. The first 5 MW turbines saw use in 2007 in the United Kingdom and in 2008 in Germany, and that size is now more common (although smaller turbines continue to be popular).

Globally, wind-turbine manufacturers are preparing for an offshore boom. In the past few years, some 41 companies have announced plans to launch new turbines optimized for offshore operations—led by European turbine manufacturers but also including companies in China, the United States, Japan, South Korea, and Israel. Most new turbines are rated above 5 MW. Vestas is preparing to test its 7 MW model, and French firm Alstom is planning to launch a 6 MW prototype, according to EWEA. Siemens is testing a 6 MW turbine in Denmark. Mitsubishi has announced plans for a 7 MW turbine, and South Korea's Samsung plans to scale develop offshore models up to 6 MW. London, England–based Condor Wind Energy has announced a 5 MW two-bladed offshore wind-turbine design, which the company claims is more efficient than three-bladed turbines because they can operate at higher running speed with much less torque on the shaft. Several companies are developing 10 MW wind-turbine designs, including American Superconductor (AMSC), which licenses its technology to other wind-turbine manufacturers (perhaps a risky strategy—AMSC recently filed suit against Chinese firm Sinovel Wind Group for breach of contract and intellectual-property theft). Chinese wind-turbine manufacturers Goldwind, Guodian United Power, and Sinovel are considering turbines in the 10 MW to 12 MW range. But Clipper Windpower dropped out of the 10 MW Britannia project in the United Kingdom in 2011, citing increasing competition, among other factors. At the upper end of the offshore turbine size range, GE has announced plans to develop a 15 MW turbine prototype by 2013, and Spain's Gamesa is planning to use a 15 MW turbine for the EU project Azimuth Offshore Wind Energy 2020.

Most of the offshore wind projects use conventional steel monopole turbine supporting structures, with gravity-based foundations, jackets, and tripiles also in use. Floating offshore wind structures are more experimental, but full-scale prototypes exist in Norway (2.3 MW) and Portugal (2 MW). Seattle, Washington–based Principle Power, Inc.; Portuguese utility Energias de Portugal; and other partners installed the 2 MW semisubmersible WindFloat off the coast of Agucadoura, Portugal, in December 2011 by assembling the turbine onshore and then transporting it to sea. Sway of Norway makes a floating tower that can carry commercially available offshore wind turbines in the 2.5 to 5 MW range. Sway recently entered into a partnership with Areva-Multibrid to use its commercial turbines.

Slower US Progress

The US wind-power industry is enjoying the most activity it has seen since 2008 but has no offshore wind projects in operation. The offshore wind potential is huge—4100 GW according to a study by the National Renewable Energy Laboratory—along the Atlantic and Pacific coasts, the Great Lakes, and the Gulf of Mexico. In 2011, the US government called for deploying 10 GW of offshore wind capacity by 2020 and 54 GW by 2030. However, the main policy drivers in the US wind market are the 2.1 ¢/kilowatt-hour Production Tax Credit (or alternatively an Investment Tax Credit) at the national level, along with Renewable Portfolio Standards in more than 30 states. The US Congress has not yet extended the tax credits, which are currently in place through December 2012, and many industry observers believe that US offshore wind projects are unlikely to move forward without renewals.

Other major challenges to US offshore wind development include institutional barriers (a very long leasing process and a lack of cooperation between federal and state agencies), public resistance, and high costs. The 468 MW Cape Wind project off the coast of Massachusetts has seen strong local opposition for nearly ten years, although the project has received major government approvals along the way. In February 2012, Massachusetts utility NSTAR agreed to purchase 27.5% of the proposed project's output. Together with an earlier power purchase agreement with northeastern US utility National Grid, the project has buyers for 77.5% of its expected output, and Cape Wind's president Jim Gordon hopes to begin financing rounds. Offshore wind development in the Great Lakes region is facing different obstacles. In late 2011, the New York Power Authority Board of Trustees canceled the 150 MW Great Lakes Offshore Wind Project on the grounds that electricity generation would cost two to four times more than a land-based wind project. In Canada, the Ontario government has a moratorium on the development of Great Lakes offshore wind for political reasons. But the New York Power Authority Board continues to pursue an offshore wind project in the Atlantic Ocean, and Rhode Island–based Deepwater Wind is progressing a 30 MW offshore-wind facility three miles off Block Island, Rhode Island. In October 2011, Deepwater Wind announced that Siemens will supply five of its new 6 MW direct drive offshore wind turbines for the Block Island Wind Farm. National Grid has also agreed to buy all the project output under a 20-year power purchase agreement.

In an effort to spur offshore wind development by reducing costs, the US Department of Energy (DOE) announced in March 2012, that it will make $180 million available in the next six years to support up to four innovative US offshore wind farms. This R&D initiative will focus on ways to reduce costs significantly from the costs of existing offshore wind technologies. The demonstration will also focus on the challenges relating to the installation of massive wind turbines offshore, connecting them to the power grid, and navigating permitting and approval processes.

Offshore Wind Plans in China and South Korea

China's wind industry has expanded very rapidly, and Chinese firms Sinovel, Goldwind, Dongfang, United Power, and Mingyang Wind Power have grown quickly to become top global manufacturers. The emergence of Chinese manufacturers has also led to very aggressive price competition and declining wind-turbine prices within China. China has an extensive coastline and large offshore wind potential. The nation currently has nearly 1.4 GW of offshore wind power installed. In 2011, the Chinese Renewable Energy Industries Association announced that China will expand its offshore wind power installed capacity to 5 GW by 2015 and 30 GW by 2020. In February 2012, the Chinese government began the second Offshore Wind Power RFP process, totaling some 1.5 to 2 GW of new capacity. Players such as Mingyang are also eying future global offshore wind markets. In March 2012, Mingyang announced the opening of an R&D facility in North Carolina that will focus on lowering the cost of offshore wind power turbines.

In a new announcement, South Korea's Ministry of Knowledge Economy recently unveiled plans for a massive offshore wind project—2.5 GW—along its southwest coast. Companies including Daewoo, Doosan, and Hyundai will participate in the project. The nation hopes to develop wind energy into a major industry—although it remains a question whether this extremely ambitious project becomes a reality.

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